Conjoint analysis is a statistical technique used in market research to determine how people value
different attributes (feature, function, benefits) that make up an individual product or service.
The objective of conjoint analysis is to determine what combination of a limited number of attributes
is most influential on respondent choice or decision making. A controlled set of potential products or
services is shown to respondents and by analyzing how they make preferences between these
products, the implicit valuation of the individual elements making up the product or service can be
determined. These implicit valuations (utilities or part-worths) can be used to create market models
that estimate market share, revenue and even profitability of new designs.
Conjoint originated in mathematical psychology and was developed by marketing professor Paul
Green at the Wharton School of the University of Pennsylvania and Data Chan. Other prominent
conjoint analysis pioneers include professor V. Seenu Srinivasan of Stanford University who
developed a linear programming (LINMAP) procedure for rank ordered data as well as a selfexplicated approach, Richard Johnson (founder of Sawtooth Software) who developed the Adaptive
Conjoint Analysis technique in the 1980s[1] and Jordan Louviere (University of Iowa) who invented
and developed Choice-based approaches to conjoint analysis and related techniques such
as MaxDiff.
Today it is used in many of the social sciences and applied sciences including marketing, product
management, and operations research. It is used frequently in testing customer acceptance of new
product designs, in assessing the appeal of advertisements and in service design. It has been used
in product positioning, but there are some who raise problems with this application of conjoint
analysis (see disadvantages).
Conjoint analysis techniques may also be referred to as multiattribute compositional modelling,
discrete choice modelling, or stated preference research, and is part of a broader set of trade-off
analysis tools used for systematic analysis of decisions. These tools include Brand-Price TradeOff, Simalto, and mathematical approaches such as AHP,[2]evolutionary algorithms or Rule
Developing Experimentation.
Conjoint Design[edit]
A product or service area is described in terms of a number of attributes. For example, a television
may have attributes of screen size, screen format, brand, price and so on. Each attribute can then
be broken down into a number of levels. For instance, levels for screen format may be LED, LCD, or
Plasma.
Respondents would be shown a set of products, prototypes, mock-ups, or pictures created from a
combination of levels from all or some of the constituent attributes and asked to choose from, rank or
rate the products they are shown. Each example is similar enough that consumers will see them as
close substitutes, but dissimilar enough that respondents can clearly determine a preference. Each
example is composed of a unique combination of product features. The data may consist of
individual ratings, rank orders, or preferences among alternative combinations.
As the number of combinations of attributes and levels increases the number of potential profiles
increases exponentially. Consequently, fractional factorial design is commonly used to reduce the
number of profiles that have to be evaluated, while ensuring enough data are available for statistical
analysis, resulting in a carefully controlled set of "profiles" for the respondent to consider
Types of conjoint analysis[edit]
The earliest forms of conjoint analysis were what are known as Full Profile studies, in which a small
set of attributes (typically 4 to 5) are used to create profiles that are shown to respondents, often on
individual cards. Respondents then rank or rate these profiles. Using relatively simple dummy
variable regression analysis the implicit utilities for the levels can be calculated.
Two drawbacks were seen in these early designs. Firstly, the number of attributes in use was heavily
restricted. With large numbers of attributes, the consideration task for respondents becomes too
large and even with fractional factorial designs the number of profiles for evaluation can increase
rapidly.
In order to use more attributes (up to 30), hybrid conjoint techniques were developed. The main
alternative was to do some form of self-explication before the conjoint tasks and some form of
adaptive computer-aided choice over the profiles to be shown.
The second drawback was that the task itself was unrealistic and did not link directly to behavioural
theory. In real-life situations, the task would be some form of actual choice between alternatives
rather than the more artificial ranking and rating originally used. Jordan Louviere pioneered an
approach that used only a choice task which became the basis of choice-based conjoint
analysis and discrete choice analysis. This stated preference research is linked to econometric
modeling and can be linked revealed preferencewhere choice models are calibrated on the basis of
real rather than survey data. Originally choice-based conjoint analysis was unable to provide
individual level utilities as it aggregated choices across a market. This made it unsuitable for market
segmentation studies. With newer hierarchical Bayesian analysis techniques, individual level utilities
can be imputed back to provide individual level data.
Information collection[edit]
Data for conjoint analysis are most commonly gathered through a market research survey, although
conjoint analysis can also be applied to a carefully designed configurator or data from an
appropriately design test market experiment. Market research rules of thumb apply with regard to
statistical sample size and accuracy when designing conjoint analysis interviews.
The length of the research questionnaire depends on the number of attributes to be assessed and
the method of conjoint analysis in use. A typical Adaptive Conjoint questionnaire with 20-25 attributes
may take more than 30 minutes to complete. Choice based conjoint, by using a smaller profile set
distributed across the sample as a whole may be completed in less than 15 minutes. Choice
exercises may be displayed as a store front type layout or in some other simulated shopping
environment.
Analysis[edit]
Depending on the type of model, different econometric and statistical methods can be used to
estimate utility functions. These utility functions indicate the perceived value of the feature and how
sensitive consumer perceptions and preferences are to changes in product features. The actual
estimation procedure will depend on the design of the task and profiles for respondents, in the type
of specification, and the scale of measure for preferences (it can be ratio, ranking, choice) which can
have a limited range or not. For rated full profile tasks, linear regression may be appropriate, for
choice based tasks, maximum likelihood estimation, usually with logistic regression are typically
used. The original methods were monotonic analysis of variance or linear programming techniques,
but contemporary marketing research practice has shifted towards choice-based models using
multinomial logit, mixed versions of this model, and other refinements. Bayesians estimators are also
very popular. Hierarchical Bayesian procedures are nowadays relatively popular as well.
Advantages[edit]
estimates psychological tradeoffs that consumers make when evaluating several attributes
together
measures preferences at the individual level
uncovers real or hidden drivers which may not be apparent to the respondent themselves
realistic choice or shopping task
able to use physical objects
if appropriately designed, the ability to model interactions between attributes can be used to
develop needs based segmentation
_____
Disadvantages[edit]
designing conjoint studies can be complex
with too many options, respondents resort to simplification strategies
difficult to use for product positioning research because there is no procedure for converting
perceptions about actual features to perceptions about a reduced set of underlying features
respondents are unable to articulate attitudes toward new categories, or may feel forced to
think about issues they would otherwise not give much thought to
poorly designed studies may over-value emotional/preference variables and undervalue
concrete variables
does not take into account the number items per purchase so it can give a poor reading of
market share
